Corporate income tax definition economics

What is corporate income tax ? How are corporations taxed? Term corporate income tax Definition : A tax on the accounting profits of corporations. This tax is only levied on corporations, and excludes businesses that are proprietorships or partnerships.

Because corporations are legal entities separate from their owners, they may be taxed as if they were persons. A corporate tax, then, is the equivalent of the income tax for natural persons.

Definition of corporate income tax: An assessment levied by a government on the profits of a company. The rate of corporate income tax paid by a business varies between countries, although since corporations are legal entities distinct. All of the money collected by the corporation during the reporting period due to services rendered or sales of a product is considered top line revenue. The corporate income tax is the third-largest source of federal revenue, although substantially smaller than the individual income tax and payroll taxes. From revenue, a company will pay its expenses.

By law, taxpayers must file an income tax return annually to determine their tax obligations. Income taxes are a source of revenue for governments. Corporate Tax - a percentage of corporate profits taken as tax by the government to fund federal programs.

Sales Tax - taxes levied on certain goods and services. Property Tax - based on the value of land and property assets. Companies use everything in the tax code to lower the cost of taxes paid by reducing their taxable incomes. Most economists concluded long ago that it is among the least efficient and least defensible taxes. Definition of income tax : Annual charge levied on both earned income (wages, salaries, commission) and unearned income (dividends, interest, rents).

Consumers are free to decide how to spend or invest their time and money. The goal of producers is to make profits by satisfying consumer demand. Open competition among producers usually in their providing the best quality of goods or services at the lowest possible prices. At percent, the U. But since many companies had found ways to get around paying the full percent, Rebelo says the overall economic impact may be less dramatic.

Taxation, imposition of compulsory levies on individuals or entities by governments. Taxes are levied in almost every country of the worl primarily to raise revenue for government expenditures, although they serve other purposes as well. The tax is calculated by multiplying net income by a flat rate. The Illinois Income Tax is base to a large extent, on the federal income tax code. Use the Tax Rate Database to determine the income and replacement tax rates.

The starting point for the Illinois Corporate Income and Replacement Tax Return is federal taxable income , which is income minus deductions. It is in opposition to a progressive tax , which takes a larger percentage from high- income earners. Business tax consists of two separate taxes: the state business tax and the city business tax.

With a few exceptions, all businesses that sell goods or services must pay the state business tax. This includes businesses with a physical location in the state as well as out-of-state businesses performing certain activities in the state.